Management guru Peter Drucker said, “the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.” Business owners in the 2012 Small Business Leadership Academy (SBLA) are taking a fresh look at marketing with guidance from Douglas Olsen, associate professor of marketing at the W. P. Carey School of Business.
The basis of marketing, he explained, is the knowledge of what customers want, need and will pay for. But many companies, Olsen added, start with a great idea and then expect the customers to find it. The problem is that many of the entrepreneurs never bothered to think about whether anyone needs their big idea. A product can be the best gizmo ever built, but if it doesn’t fulfill a customer’s desires or needs, it won’t succeed. In other cases, even if the product or service is great, the people so close to the product sometimes tend to talk too much about the features and the technical details — to a point where they do not truly convey to the customer the real benefits or identify needs being served.
Nonetheless, many successful companies have this figured out, Olsen said. Michelin famously used images of babies sitting in the middle of a tire as a way of saying that they were selling you safety for your family — not just a tire. Not a lot of jargon, just one very compelling message.
The Michelin ad demonstrates the effective use of segmentation. Once you understand your customers, Olsen said, you can use segmentation to target your marketing to them. Segmentation is the process of dividing the market into groups. Consumers may be grouped based on geography, demographics, benefits, behaviors or psychographics.
Psychographics, for example, are personality characteristics. Olsen showed the group three ads for a certain style of watch. One featured a close-up of a physically imposing man. The second showed a man sitting alone, reading. The third was Pierce Bronson, leaning toward the camera in an impeccable jacket and tie. The ads exemplify psychographic marketing. The first ad with the macho figure appeals to a market segment of men who want to be physically strong; the second ad would appeal to the “self actualizer”; Pierce Bronson personifies the sophistication and daring that another group desires.
In next week’s class we’ll dive deeper into the competitive advantage that services may provide and students will share some of the blueprints that they developed to apply to their business.
The Small Business Leadership Academy (SBLA) is an intensive executive education program designed to strengthen the business acumen of small business leaders in Arizona. The program was jointly developed by the W. P. Carey School of Business and the Salt River Project (SRP), the program’s founding sponsor. Other seat sponsors this year include: Arizona Lottery, Blue Cross Blue Shield of Arizona, Hahnco and U.S. Bank. Each week we will bring you a few salient points from each class as well as comments from the professors themselves and the impact the information has had on the students.